Reaping benefits from solar panels on a home may be harder than some sales pitches suggest

The home improvement problem started, like so many do, with a trip to Home Depot. There Richard Lindley, a 50-year-old carpenter turned general contractor who lives in Somerville, Mass., ran into a few young men he described as “earnest” and who had what he thought was a “really interesting business model.”

Here’s the pitch he heard: A company, in this case SolarCity, will come to your home and install a $20,000 solar system for you. You pay nothing. SolarCity also gets all the permits and necessary permissions in return for your signature on a 20-year contract to purchase the electricity generated by those newly installed solar panels. Said electricity is sold to you at a price lower than the local utility charges—in Lindley’s case, roughly 11 cents for every kilowatt-hour of electricity made by sunshine in the first year (with an annual increase of 2.5 percent). Any excess electricity generated is sold back onto the grid, earning you a much smaller bill from the local utility as well.

To Lindley it sounded like a dream come true, especially when he considered the chance to do something good for the environment without having to worry about insuring, maintaining or repairing a solar system. “They’re doing a really great thing with the green energy,” he says, “building an infrastructure based on solar rather than fossil fuel.”

There is a catch though: the coordination of solar company, local utility and homeowner may fail—leaving the homeowner in the lurch.

Solar is booming, thanks to cheap photovoltaics, innovative business models like the one described above and federal and state subsidies. Since 2010 solar installations in the U.S. have increased six-fold—from 2,000 to more than 12,000 megawatts worth. At the same time, the cost of installing solar has fallen by at least 60 percent. Leading the charge are companies like SunRun, SunPower and SolarCity, the latter of which installed Lindley’s system in 2013. SolarCity announced on August 7 that it had installed 1.2 megawatts worth of solar rooftops each day this spring. “Now’s the time to capture the market and grow as fast as we can,” said Chief Executive Lyndon Rive when announcing those financial results.

But as with any boom, the growth may be outpacing the ability to provide good technology and good customer service.

SOLAR ROOF: As photovoltaics on rooftops become more affordable, they have become more and more of a threat to traditional electric utilities

In Lindley’s case the bearded young men who scaled his roof for SolarCity connected the 12-panel photovoltaic system to the wrong electricity meter. As a result, Lindley did not see the nearly 4,300 kilowatt-hours of solar electricity SolarCity estimated his panels would produce annually, nor did he see his electricity bill go down. And his use of electricity seemed to go up, even though it was winter. “Instead of seeing solar in action, what I got was not only a higher electricity bill but SolarCity continued to bill me for the output of the solar panels,” he says.

In other words, Lindley was paying extra to go green, especially since SolarCity reaped all available federal and state tax credits and subsidies (as well as any future “incentives, renewable energy credits, green tags, carbon-offset credits, utility rebates or any other nonpower-system attributes of the system, are the property of and for the benefit of SolarCity” as the contract reads in all capital letters). Months of back-and-forth with SolarCity’s customer service teams led to excuses: solar panels produce less power in winter (true but, in this case, irrelevant); it’s a faulty meter, so call the local utility to repair it (false and irrelevant); and, last but not least, many people who install solar panels start using more electricity. “Some people do,” says Jonathan Bass, SolarCity’s vice president of communications. “They crank the AC because now they’ve got solar.”

“Have we changed anything in our lifestyle? We went over that,” Lindley recalls. “Ultimately, nothing has changed, nothing that would triple our usage, which is what it came down to.”

After months of frustrating back-and-forth that included SolarCity’s broken promises to send a repair crew and, eventually, Lindley’s refusal to continue to pay, it became clear that the earnest, bearded young men from SolarCity had connected the solar system to the wrong meter. The local grid had gained some 3,200 kilowatt-hours of solar electricity that never registered on Lindley’s meter or made it run backward as promised.

As a result, SolarCity credited Lindley for a year’s worth of payments and started again from zero. “It’s just been a headache. I really wish I hadn’t put them on there,” Lindley says. “To this day we don’t understand quite how it works and who’s paying what. I’m not happy with it.”

Lindley is not alone. Homeowners in Arizona have had trouble getting solar companies to return their calls to get a solar system installed. Defective panels have impeded the production of electricity from sunshine in that sun-blasted state. And utilities have begun to throw up resistance as well: the Hawaiian Electric Co. has banned the installation of new solar systems unless homeowners pay to also protect the local grid from excess solar electricity—an expense that adds thousands of dollars to the cost of a solar system and has put a damper on solar development in that sunny state.

This solar civil war has pitted local utilities—aided by outside interest groups such as the American Legislative Exchange Council—against homeowners who wish to go solar. “Since I’ve had solar there’s been two rate hikes,” says Phoenix homeowner Jerry Dieterich, another general contractor who, like most solar homeowners, is quite happy with his decision to get power from the sun though SolarCity rather than relying entirely on the local utility. “It doesn’t affect you when you have solar. I love that.”

Further complicating matters is the confusing welter of rules that vary from state to state and, in some cases, municipality to municipality. Whereas SolarCity customers in Arizona can enjoy a fixed-price lease that guarantees a certain cost each month, SolarCity customers in Massachusetts must buy the electricity from their own rooftop or sell it on to the local utility. That can put homeowners, SolarCity and the utility on opposite sides: In Lindley’s case, because SolarCity and the local utility continued to get paid no one besides Lindley had an incentive to try and get his problem fixed. “You kind of need a master’s degree in electrical engineering to understand how your electric bill from the utility is tied into SolarCity and the panels,” Lindley notes.

“We have a 20-year relationship with a customer,” says Rive of the SolarCity contracts that last longer than many marriages. “If the customer is unhappy, we have to fix it. It’s not like either one of us is going away.”

The ultimate expansion problem, however, may not be the customer service hurdles but a rebound in the price of photovoltaic devices. Curbed capacity in China plus tariffs imposed by the U.S. have seen solar module prices rebound from nearly 50 cents per watt to 60 cents per watt in recent months. That’s part of the reason that SolarCity has bought solar panel maker Silevo to ensure a steady supply of panels for expansion rather than relying on manufacturers like SunPower that are now getting into the installation business themselves as direct competitors. “For the next phase of solar, you need large-scale manufacturing up and running to reduce the cost,” Rive says. “The point is to be able to have a superior product at a lower cost to eventually get to a point where you can provide cheaper clean energy.”

SolarCity estimates that some 30 million homes in the U.S. could benefit from installing a solar system, compared with roughly 200,000 that have solar to date. In the meantime educating those future solar homeowners about the potential challenges of getting electricity from the sun does not seem to be high on the to-do lists of either companies or regulators. “If we have made a mistake, we make it right,” Bass says, noting the company’s high ratings from the Better Business Bureau and customer feedback forms. “We are trying to tear down more and more barriers to make solar mainstream.”

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Whether you are a solar homeowner, completely new to solar, or somewhere in between – this event is for you!
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